Stock Market Returns Are Anything but Average • Hacker News Board

Re: Stock Market Returns Are Anything but Average

#91

Post by tyrust » Fri, Apr 30, 2021, 2:02 PM UTC

boringg wrote: post #84

I'm going to add that I did a rudimentary an analysis of the S&P 500 because everyone seems to be throwing their money into passive S&P500 low vehicle investments. I looked at every hold period since inception from 1 year holds / returns up to 40 year hold and returns. Timing is crucial for good returns - depending on when you put in and take out your money the returns can be negative (even in cases where you hold up…

I've run similar calculations in an attempt to convince an acquaintance not to pull out their money when they "had a bad feeling" about something.

To me the takeaway isn't that "timing is critical for good returns" but that "you can't time good returns, so don't move all your money at once". You'll be investing over the years of your career and withdrawing over years of your retirement. Historically, it ends up working out.

Re: Stock Market Returns Are Anything but Average

#92

Post by cocoa19 » Fri, Apr 30, 2021, 2:02 PM UTC

boringg wrote: post #84

I'm going to add that I did a rudimentary an analysis of the S&P 500 because everyone seems to be throwing their money into passive S&P500 low vehicle investments. I looked at every hold period since inception from 1 year holds / returns up to 40 year hold and returns. Timing is crucial for good returns - depending on when you put in and take out your money the returns can be negative (even in cases where you hold up…

General consensus is to invest using dollar cost averaging so you don't rely on timing.

Invest the same amount of money each pay cycle. If stock is expensive, you'll be able to afford less stock, if stock is cheap, you'll afford more stock.

Re: Stock Market Returns Are Anything but Average

#93

Post by boringg » Fri, Apr 30, 2021, 2:03 PM UTC

fnord77 wrote: post #54

hansor wrote: post #41

US market should NOT be used as any scientific benchmark for anything - as it does not represent "all" typical possible scenarios for the stock market. Look for example(one of many) at Japanese NIKKEI index - it was going DOWN for like 20 years! So this theory does not work! Many people in Europe also quote multiple studies based on US market - but they are usually worthless on other markets(both bonds and stocks). I…

> US market is special - as US is one of very few superpowers on Earth. For now. Look how rapidly the USSR lost its superpower status. What if the Capitol insurrection were successful?

Not even a relevant comparison, sorry. Russia was a competitor but didn't have the same built in advantages.

US will remain a super power for the remainder of everyones lives on hacker news. It will diminish, but it will remain in power until we're all in the ground. Mainly stemming from its economic roots for the global financial system.

Re: Stock Market Returns Are Anything but Average

#94

Post by EGreg » Fri, Apr 30, 2021, 2:03 PM UTC

heliodor wrote: post #78

EGreg wrote: post #31

Earlier quoted context omitted.

This is going to be a silly response, but how silly is it really? You asked what you would do with your money, to grow it... This is related to the Keynsian Beauty Contest for following fads actively instead of passively taking long positions for years: https://en.wikipedia.org/wiki/Keynesian_beauty_contest How about hiring a person to research and buy the latest shitcoins on Uniswap and Pancakeswap? I can name sever…

Great! Now you have your retirement stash. You'll have to protect it for decades to come. How? Which brings you to the beginning: how do you invest your money?

The point is that your retirement stash can at that point just be kept in regular assets for decades because you have made a ton of gains through a fast sprint. Or you can take some of that to hire various money managers to repeat this strategy for years whenever the opportunities present themselves.

Re: Stock Market Returns Are Anything but Average

#95

Post by mellavora » Fri, Apr 30, 2021, 2:04 PM UTC

muskox2 wrote: post #21

staticman2 wrote: post #12

Earlier quoted context omitted.

Except measuring the value of money as something other than the ability to provide consumption (the ability to buy things you consume, rather than investments) doesn't make sense, regardless of how fashionable it is on this site to throw around the term "asset inflation".

What is your explanation for the explosion in asset prices over the last year, if not inflation? Do you think the assets have become fundamentally more valuable?

There is a big difference between

"things are getting more expensive"

and

"things (that I already own) are getting more expensive"

Apologies for the snark; I've been around the "what is inflation really measuring" debate one time too many.

Re: Stock Market Returns Are Anything but Average

#96

Post by ed25519FUUU » Fri, Apr 30, 2021, 2:04 PM UTC

boringg wrote: post #87

ahelwer wrote: post #6

There are all sorts of interesting facts you can pull out of this, like how if you missed the top 10 best days in the market from 1999-2019, your return was cut in half. If you missed the top 20 best days, you actually lost money: https://www.fool.com/investing/2019/04/11/what-happens-when-... Basically never mistake annualized return over a long period of time for your expected return in a given year (or day, etc).…

I think the way you should think about the stock market is similar to beating the Casino in blackjack & card counting. When you know the deck is rich ins face cards make more aggressive bets, when its low in face cards be frugal. I.e. don't put lots of money into the market when its hot & put more money in when its cold. That way you statistically have a better chance on getting a good return.

How do you know any of that though? Nobody really does. The fancy hedge funds and the skittish retail investor are all just guessing. Buy and hold seems to be the only sane strategy.

Re: Stock Market Returns Are Anything but Average

#97

Post by LatteLazy » Fri, Apr 30, 2021, 2:04 PM UTC

hpkuarg wrote: post #2

I mean, just look at last year, when the S&P 500 index plunged over 30%, then proceeded to nearly double from then until now, in the midst of a global pandemic that froze big chunks of the world economy. Stock market returns make no sense.

The stock market is about future expectations. As soon as you know that, the last year makes perfect sense. Oh no, a plague = crash. Oh wait, it will be shitty for 6 to 24 months but actually not that bad and people are still buying stuff just as much as before = Boom.

Re: Stock Market Returns Are Anything but Average

#98

Post by as_i_fall » Fri, Apr 30, 2021, 2:05 PM UTC

boringg wrote: post #84

I'm going to add that I did a rudimentary an analysis of the S&P 500 because everyone seems to be throwing their money into passive S&P500 low vehicle investments. I looked at every hold period since inception from 1 year holds / returns up to 40 year hold and returns. Timing is crucial for good returns - depending on when you put in and take out your money the returns can be negative (even in cases where you hold up…

I don't think anyone is claiming that throwing your money into SPY for a year or even 5 will guarantee returns.

Re: Stock Market Returns Are Anything but Average

#99

Post by ed25519FUUU » Fri, Apr 30, 2021, 2:07 PM UTC

nfRfqX5n wrote: post #70

hourislate wrote: post #60

Earlier quoted context omitted.

A Pandemic and multiple conflict zones were no more than a pot hole. The markets have pushed higher with no end in sight. The Fed and Treasury are making sure that if there is no one to buy stocks they will. There is no end to the support the Federal Reserve will shoulder for the markets. With Governments around the world determined to never let the Economy fall or stay down even if it means directly sending money to…

i've been thinking the same thing for a couple years now. lots of people keep harping on doomsday scenarios, but it seems too many people have too much invested in the market for it to fail

That type of intervention prolongs the inevitable, but certainly won’t stop a collapse.

Re: Stock Market Returns Are Anything but Average

#100

Post by jusssi » Fri, Apr 30, 2021, 2:07 PM UTC

cocoa19 wrote: post #92

boringg wrote: post #84

I'm going to add that I did a rudimentary an analysis of the S&P 500 because everyone seems to be throwing their money into passive S&P500 low vehicle investments. I looked at every hold period since inception from 1 year holds / returns up to 40 year hold and returns. Timing is crucial for good returns - depending on when you put in and take out your money the returns can be negative (even in cases where you hold up…

General consensus is to invest using dollar cost averaging so you don't rely on timing. Invest the same amount of money each pay cycle. If stock is expensive, you'll be able to afford less stock, if stock is cheap, you'll afford more stock.

The same principle can be applied for taking your money out. Instead of a single big cash-out, take $X per month.